98% of a Construction Firm’s Emissions Sit in Its Supply Chain

At John Sisk & Son, up to 98% of company emissions sit in the supply chain. That changes the decarbonisation problem completely: the biggest levers are often not on the construction site, but in what gets bought.

I speak with Keith O’Flynn, Group Supply Chain Sustainability Manager at Sisk, about what that means in practice for one of Ireland’s largest contractors. When concrete and steel dominate purchased-goods emissions, procurement decisions become climate decisions — but thin margins, imperfect carbon data and established standards can slow change.

We examine why low-carbon concrete can deliver major embodied-carbon reductions yet still struggle to scale, what makes cleaner steel harder to source, and why spend-based Scope 3 accounting can give companies a dangerously fuzzy picture of their footprint. We also look at the tension between commercial reality and the growing demand from clients for demonstrably lower-carbon projects.

Listen now to understand where construction’s Scope 3 emissions really sit — and what has to change if companies are serious about cutting them.

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Transcript

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Keith O'Flynn: 0:00

At the moment, we would see our Scope 1 and Scope 2 emissions probably being about a 2% of our overall emissions as a company. Up to 98% of our entire company's emissions are supply chain based.

Tom Raftery: 0:27

Good morning, good afternoon, or good evening, wherever you are in the world. This is Climate Confident Stories and Strategies that Cut Emissions episode 290, and I'm your host, Tom Raftery. I'm taking a short summer break at the moment, so this week I'm doing something a little different. The conversation you're about to hear originally appeared on my resilient supply chain earlier this year, but when I was thinking about an episode to share with you here, this one stood out immediately. You heard why in that opening clip when 98% of a company's emissions sit in its supply chain, climate strategy and supply chain strategy become very difficult to separate. My guest is Keith O'Flynn, Group Supply Chain Sustainability Manager at John Sisk & Son, and we get into the practical realities of cutting emissions in construction, concrete steel scope, three low carbon materials, circularity emissions data, and the sometimes uncomfortable gap between climate ambition and commercial reality. So although the conversation began life on Resilient Supply Chain, I think it sits very naturally here in Climate Confident too. And if you enjoy it, do check out Resilient Supply Chain and follow the show there as well. I'll have another episode next Wednesday, the 26th of August with Priscillia Moulin, and then on September 2nd, we're properly back into the regular Climate Confident run with Julia Souder, CEO of the Long Duration Energy Storage Council. For now though, here's my conversation with Keith O'Flynn. Keith, welcome to the podcast. Would you like to introduce yourself?

Keith O'Flynn: 2:18

Thanks very much Tom and many thanks for having me on the podcast today. I'm Keith O'Flynn. I'm Group Supply Chain Sustainability Manager with John Sisk and Son. My role is primarily around dealing with our supply chain, engaging with them on sustainability issues, specifically carbon being a top one. For us as a business, 'cause Scope 3 which we all know is our supply chain emissions, is the largest part of our entire business emissions. So a large part of my job is engaging with supply chain, looking at different materials, seeing what we can do in terms of lowering our, carbon footprint as a business. But there is obviously a lot more to sustainability than carbon emissions alone. And in sustainable procurement, you also, be involved in circularity, labor and human rights, social value and looking at a more holistic way of dealing with suppliers And, pushing that boundary within construction to see what we can do to increase sustainability across the board.

Tom Raftery: 3:24

And just to give people a bit of context, Keith, can you explain John Sisk, the company, I know you're founded back in the 1850's. But you know, for people who are unfamiliar, tell us a bit about the company.

Keith O'Flynn: 3:37

Absolutely. Yeah. for those who wouldn't know John Sisk. So we are a contractor Irish contractor. We were first founded back in the 19th century by John Sisk. We have developed into the largest contractor in Ireland and we work across multi geographies within Europe, especially in Ireland and the UK. A lot of our work at the moment deals around, various different business units such as data centers, life science and tech, residential buildings, commercial buildings, stadia fit outs mechanical and electrical work, and also offsite manufacturing, with our other division of Vision Built. We are certainly within Ireland, we're a tier one contractor and UK as well. Multiple clients across the board, including multinationals, including Amazon Apple, Microsoft. And Johnson Johnson would be classified as some of our major clients.

Tom Raftery: 4:37

So construction has a reputation as being heavy, slow, carbon intensive. How do you hit on that challenge, you know, from, from where you sit?

Keith O'Flynn: 4:49

Yeah, it's a difficult one to address. Construction is renowned for being very conservative. It's very much bottom line. The margins within construction are so small, you're looking at your 1, 2% margins. So profit at the end of the day is key to any business. But construction and certainly Sisk, were very well aware of our role in reducing the impacts of our industry on climate change. A lot of people in the industry are beginning to not look at sustainability as an add-on, as something that could be nice and a good ticket item to get some awards at the end of a scheme, but it's actually scouting to be embedded within strategy and how people are building entire businesses within construction. Within Sisk, we have our Breaking New Ground strategy, which has a real strong focus on net zero and pushing net zero initiatives within our projects and across the business. And that goes from looking at sustainable materials looking at offsite manufacturing and really kind of focusing in on how we can reduce our impacts right from the beginning of a project at the initial concept right through from design right through to onsite construction of the project, and then reporting at the end, which are as-builts and addressing any, complications, learning from our processes and then bringing them forward into the next projects. A lot is being driven by clients as well it has to be said. A lot of clients are pushing contractors and pushing construction companies to give more, and they see the need to act now. A lot of contracts now are, heavily weighted in terms of sustainability and, having contractors to prove their ability to reduce emissions across the board. Our emissions as a company are their Scope 3 emissions. So, if they've have their own targets set they're looking to us to help reduce their emissions and us in turn are looking to our supply chain to reduce our emissions. So there's a real kind of flowing effect within construction at the moment, and people are certainly looking at sustainability as it ain't going anywhere that's for certain. But it's growing in importance in contracts And, we've seen that and are pivoting our strategy to that as well.

Tom Raftery: 7:26

And you're saying it's not going anywhere and it's growing in importance. Why do you think that is?

Keith O'Flynn: 7:33

Well, legislation regulations are pushing a lot of that. I mean, you have CSRD reporting. While it is just a reporting directive, a lot of our clients would be looking towards that and seeing how companies are making impact in terms of reducing their carbon emissions. We also have set targets as a business, so SBTI targets, are key to that And, you know, aiming towards our 2030 targets as a business ourselves. And also a lot of clients are looking to CDP and they want their contractors to have a high enough rating that proves to them as a client that their supply chain is making a difference. And we need to show those clients And, any regulators that Sisk and other contractors are pushing that boat.

Tom Raftery: 8:24

So Keith, where does the bulk of the carbon really sit? Is it in concrete? Is it in steel, which are, you know, both really hard to abate? Is it in transport, is it in something else? You mentioned Scope 3 and your suppliers. Is it a combination? where do you see the biggest impact?

Keith O'Flynn: 8:41

Certainly Scope 3 would be the biggest impact. So we obviously report our, emissions as a company every year. We've done so since 2019 where we established a baseline. At the moment, we would see our Scope 1 and Scope 2 emissions probably being about a 2% of our overall emissions as a company. Up to 98% of our entire company's emissions are supply chain based. Now we've done huge amount of work in terms to reduce our Scope 1 and Scope 2 emissions. And Scope 1 especially, we're looking at alternative fuels. HVO has been mandated across the board since 2021, 22. We've seen 82% usage of HVO in 2024, which is, quite significant for business the size of Sisk. And then Scope 2. renewable energy sources really have to be at the forefront of that. And, you know, we're really pushing the boundary and, engaging with a lot of our electricity suppliers to ensure that our energy uses are from renewable sources, but also looking at energy reduction across sites and implementing new, innovative techniques you know, such as your smart units and, different studies that actually showed that majority of energy usage on a construction site is after hours. A recent study by one of our energy manager, Ian O'Connor with Trinity showed that a majority of energy usage on site was after hours. And really kind of honing in on that data to help produce our emissions and Scope 1 and Scope 2. Even though it is that only 2% of overall emissions, it is controllable

Tom Raftery: 10:31

Yeah.

Keith O'Flynn: 10:32

and we're able to really make an impact there. In terms of our supply chain and Scope 3 we would see that around 90% of our emissions are in our purchased goods and services. And about 80% of that is in our concrete and steel. So quite a significant chunk of our businesses and missions come to that, really down to two materials. We've done huge amount of work as a company aligning with the likes of Concrete Zero, Steel Zero to set targets on procuring low carbon concrete and low carbon steel. And really kind of enacting that across the business in, showcasing that low carbon concrete can be used and is a viable option for projects. We've done a recent low carbon concrete demonstrator at our project in Wembley, collaborating with multiple supply chain partners especially with Eco sem. And it was using a novel cement called ACT and was looking at a 70% reduction in embodied carbon compared to Sem 1 baseline. So significant changes can be made And through that, process And, you know, showcasing something that people can see, they can touch, they can believe that, this can be used. And then also being at the table, having those discussions with the regulators, with the people who specify, with those who set the standards. That all makes a big change for the industry and certainly for us as a business. We see that as a real important role in, to really showcase leadership Within that space. Our other emissions then within Scope 3, such as employee commuting and business travel. Really kind of looking at the data in that and trying to see where we can make, things more efficient. Reducing the amount of travel between sites. They're reducing the amount of flights, for instance, across the business. Teams obviously has helped a lot in that sense. And then looking at our fleet as well, looking to electrify our fleet. Stepping away from fossil fuels can be quite difficult at times. Especially when you're in Ireland. The Benefit in Kind isn't the same as the UK. And it's, all our employees for their company cars are electrified within the UK. Within Ireland, it's slightly different, bit more difficult to change. That just comes down to regulations which obviously Sisk are, pushing the boat out and trying to help in that sense as well. changing mindsets I think is key to a lot of this. Another one as well is waste. Obviously it's controllable for ourselves. The more waste we produce, the more emissions we produce. So we've looking at better means of segregating, better means of reducing waste before it even comes to site. So zero avoidable waste, for instance, looking at offsite manufacturing is a big part of that. Where I think we could probably challenge more and get better is probably the data itself. It's can be quite a bit ambiguous in terms of how you calculate your emissions sometimes. If you don't have accurate EPDs or accurate information on the factors for a particular material. You've really got two options. Either you put them together in a general factor such as concrete just being one factor and not taking into account the many different mixes that you'd use across company or you use the spend based approach. Which, you know, I'm sure yourself and a lot of your listeners know that spend based would be, quite changeable in terms of how it, you know, really calculates a business' emissions. And an auditor once said to me before that you're looking at potential plus or minus a hundred percent difference at spend based calculations. But we certainly want to get to that stage where all products that we use have an emission factor against them. They're easily traceable through conducting LCAs, bringing that right way through to as builts. And also using, utilising our own in-house resources, developing carbon dashboards, which bring in information from coins, which is a invoicing platform and bringing that information into a dashboard, which we can then hone in on that detail of those materials that are being actually invoiced for across the business. Put carbon factors against those and then drill down deep into the emissions of each project and really kind of develop a plan going forward then of how we can use better materials on future projects and driving that change which the industry needs essentially.

Tom Raftery: 15:41

Sure. sure. Couple of quick questions on that. You mentioned that the construction sites had a higher emissions after hours. What's that coming from?

Keith O'Flynn: 15:54

A lot of construction sites would be if they're powered by generators, you would find that a generator would be left humming on in the background, to keep the power on for security purposes. But if you go into an office at night, pretty much all your computers would be either left on or plugged in. Screens would be left on, or at least that little red dot would be left on, on the screen. You also have drying rooms dehumidifiers, that would be in use at night as well. But what you're really looking to do, and this certain that study that Ian was a part of is assessing how we can now act on that data and how we can reduce that energy inefficiency. And using smart meters, using smart units that will automatically switch off power if there's no use over a certain time. Or using smart devices, which you can switch on and off yourself in order to, you know. Reduce that energy inefficiency. a lot of our sites now would come with a hybrid approach in terms of your generator and battery setup. If they can't connect to the grid, and with that battery set up, you do get a lot more efficient use of power generation on sites. Essentially the site would be running off the battery with the generator, backing it up whenever it needs to be topped up. We're also looking at another innovation. Our plant department has done incredible work looking at a glycerin generator, which essentially is sugar and water. We trialed it up in our project in Derby recently with great results from soy here. I know they're still looking at the data on it. But that obviously is a zero emission approach. It was very successful powering the site. No issues there. And. Looking at that data, seeing the cost benefit of that and seeing if that is something we can progress further into the business. There was a lot of talk over the years, really since probably 2020, around COVID time in terms of hydrogen being the game changer for power generation on sites. And it hasn't taken off the way we felt it could have back in 21, 22. Really costs, essentially it comes down to and supply of green hydrogen. Where that comes from,

Tom Raftery: 18:33

Yep.

Keith O'Flynn: 18:34

Is, is the biggest barrier to that. Companies like ourselves are now looking to other options And trialling that something kind of cool like the glycerin generator kinda showcases that.

Tom Raftery: 18:45

Interesting. And you mentioned cost benefit. I wanna go back to your comment about the ACT cement that you are using in the UK. Is that significantly more expensive than normal cement? Or where does that kind of cost benefit fall?

Keith O'Flynn: 19:32

Yeah, it's certainly not significantly more expensive. There is, in terms of, I guess, payback for research conducted by the company,

Tom Raftery: 19:40

Hmm.

Keith O'Flynn: 19:40

There would be an element of, uplift to using a novel cement like this. But in construction, we need to step away from looking at that bottom line at every time. Now I know people would argue that the 1, 2% margins would say different, but we really need to showcase within construction that we are making a change and really putting our money where our mouth is when we're setting targets as a business championing low carbon materials That I think will push low carbon materials and sustainable materials more than cost into the future. You're seeing that across different tenders that we are working on with multiple clients across Ireland, UK and Europe. And cost of course is still significantly important, but just as important now is sustainability and social value and the impact to that that you have as a company. They're really putting a lot of emphasis on this and a lot of clients are willing to pay more for that sustainable product. I would say a bigger barrier to the use of the likes of that ACT cement, which we talked about would be the standards and we need to change the standards more within construction. Now, I'm not a structural engineer and if there's any listening to this and they're saying, well, we can't just change standards to suit all novel cements that's absolutely fine, but I think we need to really approach things now and look at innovative products in construction and adjust standards to those materials that have proven and are proven like time and time again, that they reach a specific strength or reach a specific standard and then allow construction companies to use those novel materials within the project itself. Insurance companies as well are part of that And, you know, clients And, you know, regulators, it's all very much a collaborative approach. And in fairness to the likes of Concrete Zero and other working groups such as Low Carbon Concrete Working Group in the UK they have the likes of the insurance companies, the likes of the standards authorities. They are at the table and they're discussing these things with contractors. So there certainly is an understanding that construction industry needs to change. It probably isn't changing as quick as us in the sustainability landscape would like, but we, we are getting there.

Tom Raftery: 22:25

Okay, fantastic. And obviously you've talked about ACT and Concrete Zero, but you're also part of Steel Zero. So how plausible is it to get your hands on low carbon steel in any significant quantity anytime soon?

Keith O'Flynn: 22:47

Yeah, it's a difficult one, I would say certainly in terms of structural steel. You're really looking at the likes of steel manufacturers in the Nordics. Their name leaves me now but they're producing steel, using hydrogen. And it is the first fossil free steel that was ever put in the market. Now it is plate steel. It's not structural. That has a huge potential. That could drive a big change. But again, you're looking at a hydrogen market that maybe just isn't there yet. I know within Germany they're looking to really advance that hydrogen network and push hydrogen produced steel within their industry there. And then when you go to the likes of reinforced steel, you're really looking at electric arc furnace and using recycled steels to be the, forebearer of net zero steel Electric arc furnace can be, you know, there's some suppliers in France. Their arc furnace is powered using nuclear power which obviously comes with other sustainability issues. But in terms of emissions, it could be classified as as close to zero emissions. There is an interesting discussion in terms of the use of scrap steel and the higher percentage of scrap steel within electric arc furnace. Does that have knock on effects globally in terms of the overuse of scrap within say Europe? Will that reduce the amount of scrap that would be available for arc furnaces in Southeast Asia or Asia. And therefore have to increase the amount of virgin materials that have to be taken out in order to create another batch of steel. So a lot of interesting conversations around steel industry, I think. It's huge investment. Massive investment by all the steel manufacturers. But I think there is a, an ongoing understanding that the likes of Sisk and our clients we're pushing that boat out and wanting these materials more and more. I guess the industry, the likes of steel industry will only supply what, when there is a demand and that demand is growing. The one thing with steel, I would say certainly is probably circularity comes into this and the reuse of steel. And looking at buildings that are set for demolition and the reuse of that steel potentially within the new building or another project. Standards, again, probably need to change for that, to allow for that steel to be assessed and the quality shown on it and then push that circularity piece within projects, which allows then for a greater reduction in emissions.'cause you obviously, you're not using your virgin steel for that.

Tom Raftery: 25:47

Okay. And how are you bringing your supply chain thousands of subcontractors on this journey? Because I'm sure we mentioned at the start, the construction industry isn't that digital and isn't that advanced typically, so that's gotta be a big challenge.

Keith O'Flynn: 26:09

Absolutely. a lot of it is driven by giving our supply chain the resources that allow them to learn and allow them to grow as a business. Sisk have partnered with supply chain school in the UK for a large number of years, and our founding a partner of the school in Ireland. We onboard our subcontractors, onboard suppliers. We ask for resources to be used in terms of introduction to climate change, how people can create carbon reduction plans, can create sustainability strategies and really embedding that into our supply chain onboarding process is going to be key. And pushing the boat out in terms of how suppliers can push their business and to make real tangible change in what they're doing, which then obviously will, aid Sisk and our clients. Another one that we're looking at and it's, hopefully will be coming on online in the, coming few months, is looking at ESG common assessment standards for our subcontractors in Ireland. And we've developed with partners within the industry, a questionnaire that subcontractors can complete. It gives a good assessment of where they are in terms of their ESG targets themselves and where they're looking to go. So, yeah, creating platforms like that And, giving the means for our suppliers and subcontractors to develop as businesses is key. Sisk is a, large company as well as our other partners in construction across Ireland, UK, and we need to kind of push the supply chain a bit more. And, giving the means to do that is key.

Tom Raftery: 28:06

Yeah. And you've committed to net zero by 2030. What parts of that target keep you up at night?

Keith O'Flynn: 28:15

Probably all of it. Tom, I'll be honest, we're under no illusions. It's an ambitious Net zero, Scope 1 and 2, and then 28% reduction in our Scope 3 emissions. In terms of Scope 1 certainly the use of HVO, the use of electrification of our generators. The trial that I spoke about at Derby with the glycerin is, key to reaching that goal of net zero for Scope 1. Scope 2 aligning ourselves with renewable energy providers and reducing energy within our own buildings is key to that. Scope 3, the 28% reduction is certainly is ambitious. The business has grown by around about 50% over the past three years. A business that grows at that rate, it can be difficult to get hold of, your emissions to start really making tangible change. But we've identified, we know the big ticket items that we need to address. We know it's concrete, we know it's steel. We're making those commitments because we know we can enact change within those materials. Clients across the board are looking at our LCAs really kind of looking at Sisk in terms of sustainable procurement as a real kind of torch bearer in how low carbon materials can be brought into a design and brought through a process and showing that commitment with our clients will help us get there. Whether we reach the specific targets in five years, I think we'll certainly aim to get there. Very ambitious, but you have to be ambitious in your climate reduction targets. There's no point in trying to sit on the fence in terms of reducing emissions And, we need to act not just as a construction industry, but across the board. The science is clear that, if we don't reduce our emissions, the impacts to all of us in the globe is going to be enormous. And I think all of us across all multi industries should be more ambitious and should push the boat out more to really reduce those impacts, 'because we don't, we know what'll happen.

Tom Raftery: 30:32

Just for clarification purposes, you mentioned HVO a couple of times, their hydro treated vegetable oil. For people listening who might be unfamiliar, it's basically a renewable fuel made from waste oils. Is that a straight drop in replacement for diesel, or does the machinery require some kind of modification and following on, how easy is it to get your hands on the quantities of HVO that you need?

Keith O'Flynn: 31:01

So, yeah, it's we found since we've mandated it there has been zero issues in terms of plant or machinery that is used HVO. So the old, pushback to HVO use was, you need to retrofit your engine or you need to change filters more often, or there's a lot of excuses to be used, but the trials that we've done as a company with multiple suppliers of plant before we brought this in as a mandate proved beyond doubt that HVO is a drop in for diesel. You're looking up to 90% reduction in emissions compared to diesel. So it does make sense as a transition fuel. And I do use that word, transition fuel. We are under no illusions that HVO is the ultimate solution. It, it's not. but in order for us to reach targets and for really kind of push the boat out and like this is what's we can do as an industry. HVO was that push. There is a lot of question marks. I know people across the industry and other, businesses in construction, they would claim that HVO there's a pushback on it in terms of sustainability. Yes, the emissions reduction are clear, but some would have concerns on the source of the feed stock to create the HVO. We ourselves require all our suppliers to be ISCC certified, which essentially is raw material right through to usage of certification, a chain of custody essentially for HVO. And we would audit all our suppliers to ensure that certification is in place and being looked at and they're checking their supply chain And, going right back to source. Is there enough HVO? Yeah. Well, according to, latest statistics across the industry, certainly we found that there's been no issues in supply. There was, a slight dip back a few years when a supplier in the UK had some issues, but even through that, that was only over a matter of a few weeks and supply was back up. So we haven't found any issues in our supply chain, certainly,

Tom Raftery: 33:18

Great.

Keith O'Flynn: 33:19

In terms of HVO use, the benefits are there for us, certainly in terms of reducing our Scope 1 emissions.

Tom Raftery: 33:25

Nice. What can other industries learn from what you've tried and tested, do you think?

Keith O'Flynn: 33:29

I'll start with construction and other people within the construction industry. There's huge amount of work that suppliers across the globe are doing to reduce emissions across all materials used in construction, from concrete to steel, to insulation to plaster board, to light gauge steel to your air conditioning units. Engage with the suppliers, engage with the supply chain, and give them a chance to showcase how good they can, produce for you as a client For other industries, Tom, I would say something similar is, let's push the boat out and see how far we can really reduce emissions, like absolute emissions

Tom Raftery: 34:15

Hmm.

Keith O'Flynn: 34:16

and be as innovative and. a bit of a rebel if I'm honest. And really kind of try and change things because we know the impacts if we don't. There's a lot out there. A lot of suppliers are doing huge amounts in terms of, trying to reduce emissions, trying to be as sustainable as possible. I think we just need to engage with them more. It's part of my role that I love is engaging with suppliers and just learning what they're doing. They're the experts at the end of the day. They're the ones that know their material or know their process inside out. They want to show what they have and really kind of give that push to their clients likes of the contractors of this world to say, yeah, here we are. We can make a difference. let's use it.

Tom Raftery: 35:07

Okay, left field. Question for you, Keith. If you could have any person or character, alive or dead, real or fictional as a champion for sustainable construction, who would it be and why?

Keith O'Flynn: 35:25

Yeah, great question. the, obvious answer is supposed to be to like David Attenborough. we've all grown up with him and his voiceovers of all these nature documentaries for, past 60, 70 years. He's a real champion of sustainability and people do stand up and listen. So I think in terms of, you know, to make a real drive and impact change, I think Sir David Attenborough would have to be, it really.

Tom Raftery: 35:52

Great. We're coming towards the end of the podcast now, Keith, is there any question that I didn't ask that you wish I did or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Keith O'Flynn: 36:05

No, I think we're good, Tom. I think we covered a lot. I've no doubt I'll sit down for a cup of tea after this and think, why didn't I say that? But happy about how we progressed there,

Tom Raftery: 36:16

Okay, great. Keith, if people would like to know more about yourself or any of the things we discussed on the podcast today, where would you have me direct them?

Keith O'Flynn: 36:24

Then Keith O'Flynn. Then you'll find me there. Or if you wanted to reach out to Sisk, go to our website, Sisk.com.

Tom Raftery: 36:32

Fantastic. Keith, that's been really interesting. Thanks a million for coming on the podcast today.

Keith O'Flynn: 36:36

Thanks for having me Tom